Thursday, July 30, 2015
BUS 150 page 412 Ratios
(Don't remember the author of textbook, sorry)...
1. Profitability Ratios:
a. Return on Sales = Net Income/Net Sales = 300/1800 x 100% = 16.7%
b. Return on Equity = Net Income / Total Owner’s Equity = 300 / 1000 x 100% = 30%
c. Earnings per Share = Net income / Average # of Shares = 300/100 = 3$
2. Liquidity Ratios:
a. Current Ratio = Current Assets / Current Liabilities = 700/400 = 1.75
b. Quick Ratio = (Current Assets less Inventory)/Current Liabilities= (700-300)/400=1
3. Activity Ratios:
a. Inventory Turnover = COGS/Average Inventory = 1000 / [(300+250)/2] = 3.64
b. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable = 1800/[(300+350)/2] = 5.53
4. Leverage Ratios:
a. Debt to Equity = total liabilities / total equity = 2000/1000 = 2
b. Debt to Total Assets = Total Liabilities / Total Assets = 2000/3000= 0.67
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